business financing quick-overview

knowing if you’re a financially healthy
individual is usually pretty easy to figure out
you’re financially healthy if you’re saving money your expenses are lower
than your income you’ve avoided high interest debt you’re putting money to
work through investing and you’ve protected yourself through insurance to
be financially healthy as a business is a little more complex but the core issue
is the same being smart with your money let’s look at a few best practices that
can be the difference between long term success and failure first and foremost
who’s handling your money 80% of the risk of business phases is actually
inside the business from the people it hires and the processes that are in
place ensure that anyone who has anything to do with money has been
thoroughly vetted is adequately supervised and their money decisions are
double-checked second what money culture a you building culture is important in
business and the culture will sometimes determine how financially healthy the
business can be does your cash run down to the wire each month and payments just
scrape by or is there a giant financial cushion of cash in the bank in case of a
rainy day frankly neither of these are particularly healthy as the prior
creates a culture of scarcity and panic and the latter creates an aversion to
risk and ongoing investment so make sure you have a balanced money culture third
what practices will help build healthy money muscles within your business
frugality can be your friend when building a business ask yourself if an
expense will directly contribute to sales and growth do you really need it
to know where you stand make sure you look at the following numbers regularly
track them over time and learn how to optimize inventory days how long do you
hold an item in inventory and what’s the least amount of inventory you can safely
have on hand profit numbers you need to know how much money you make after
building your product just the gross profit and after you cover fixed costs
your net profit this will give you a better view of your bottom line work
with your accountant if you need help with these numbers
accounts receivable days how quickly are you being paid by your customers the
faster the better sales activity how big is your pipeline how long does it take
to convert a prospect into a customer and how much does it cost to a
we’re a customer what’s your customer retention rate these are all important
to know and track a great activity to undertake is to consider an independent
review of your company imagine that a deep-pocketed company is coming to look
at your business for possible acquisition one of the first things that
they would look at would be your financials will they find the following
that you’re growing your revenue while keeping expenses in check that you’re
not buried under lots of interest payments on your debt will they find
that your overall debt level is healthy or that your clients are a healthy mix
of repeat customers and new and especially that you’re not dependent on
a big single customer will they find that you have a healthy amount of cash
on hand and most importantly that you’re profitable putting an outsider’s
perspective on your business can help clear away the millions of details that
clamor for your attention each day and keep you focused on how to build and
maintain a financially healthy business accountants are terrific at these sorts
of exercises and can help you fix issues along the way getting your company on a
good financial footing takes time and effort and even after things are in
control you still need to keep your eye on things you the way that money flows through your
business is relatively simple keeping track of it for the purposes of taxes
forecasting and cash flow is not so simple and that’s where partners come in
one of the first things that a new business owner needs to do is open a
bank account for a business it’s important to consider the bank as a
partner when comparing banks make sure you focus on fees wire fees overdraft
fees ACH fees and monthly fees can all add up also investigate introductory
offers and interest rates for both deposits and line of credit so you can
save some money and make sure you read the fine print to know your minimum
daily balance minimum average monthly balance and transaction limits if you
need a merchant account quick check do you need to process credit cards then
you’ll need a merchant account there are new flat rate vendors like stripe and
Square which are inexpensive for small businesses and easy to implement your
bank and independent merchant account vendors will also offer services which
probably have an interchange plus cost structure these can be less expensive
than the fixed rate services if you have a lot of transactions add up the amount
you’ll be paying per transaction plus any monthly fees pick a vendor with a
low cost and then make sure they have a good reputation you don’t want to have
disagreements with the vendor that controls your revenue but what about the
value that banks cannot think about this it’s in the bank’s best interest to see
you succeed so look for a banking partner that offers advice and tools to
help you do that it may come in the form of business advice on their site or in
their branch or local events where you can connect with other businesses around
you make sure they assign you a personal banker who hopefully call you if a check
is about to bounce and make sure that their website allows you to do wire
transfers a CHS pay bills and deposit checks remotely beyond this banks up a
protection by separating your business finances from your personal funds they
can help with lines of credit to smooth over cash flow crunches or help you make
a large purchase and just like with personal banking businesses need a
credit history so look for products like credit cards that can help you do that
but what about non banking partners that can contribute to the financial health
of your business a trusted accountant can be a
huge help but you don’t need an accountant for most data tech tasks many
small businesses pay a bookkeeper to keep track of transactions and only use
an accountant to file their taxes or to give specific advice again most
bookkeeping work can be done yourself with software like quicken or fresh
books a trusted lawyer can be a huge help to but keep the high hourly rate
lawyers for the more complex legal issues many basic legal tasks can be
done via sites like Legal Zoom and biz filings search for free documentation on
sites like coolie go a multinational law firm that allows you to download
contracts for free for the UK and US one of the biggest time syncs for business
owners with staff is HR as you scale your business look for outsourced
partners who can manage your payroll insurance contracts and benefits
companies like China just works an ATP in the US can reduce your administrative
time significantly lastly look for an insurance company that has expertise in
your particular field getting general business owners insurance may be enough
for some small businesses but look carefully into whether you need specific
policies like product liability insurance or professional services
insurance the great thing about using a mix of software and human partners is
that you should only pay for the personal touch when it can significantly
help the quality of the outcome use high-cost humans when you have specific
problems to overcome the bottom line is that time is money and as a business
owner your time should be spent on growing your business using cost
effective solutions for elements of your business that are not directly
contributing to your growth can save you time and help you focus on growing your
business you cash is the blood that flows through a
business keeping it alive without enough cash flow your business can grind to a
halt before you can get to cash flow you need to build a business first and this
will cost money so before you start anything you need to figure out how much
money you’ll need to get your business off the ground so you need to make a
budget go out and price the cost of bringing your idea to life this is a
tough exercise but one that’s really important this budget needs to follow
you forever on one side you’ll have your forecast on the other you’ll have your
actual numbers make sure you know how the two compare said that you know if
you’re overspending or if you’re on target once you’re ready to start
building your business you’ll need some cash and this will probably come in the
form of fundraising but know that this money is not cash flow this cash is the
seed money from which you’ll grow your business be careful with this money take
care of it and spend it wisely so as you build your business you’ll get to a
point where as your seed money starts to run out your business will launch and
revenue will start to come in this is where your idea turns into a business
it’s important at this moment to go back to your budget and figure out what it’ll
cost you to run the business this is very different from your initial budget
to build the business calculate all the costs of running your business from rent
labor benefits office supplies internet and website support to the cost of
materials add this up this is the cash flow you require each month to run the
business also known as your burn at some point in the future you’ll need revenue
to cover your burn if you can’t you’ll need to take the cash or that you have
in the bank and this makes negative cash flow you’re not making enough money to
cover your costs at some point you need to get to positive cash flow where
revenue covers your burn otherwise eventually you’ll run out of money so a
couple of notes here it costs money to increase revenue customers don’t just
arrive at your door you need to market your product and drive customers to your
door so revenues not a dollar-for-dollar road to positive cash flow it’ll cost
you money to get that revenue so be prepared most new businesses
overestimate future sales build a big buffer into your sales for
pasts so you have cash on hand to handle the negative cash flow revenue is almost
always bumpy be prepared for good knots and bad mops and have a reserve to cover
for the short months or talk to your banker about a line of credit that’s
available just in case you need it be prepared for big expenditures computers
and equipment can be written off the books over several years but have to be
paid for upfront be ready for those big dings to the cash in your bank account
pay your bills slowly and collect revenue quickly by doing this you can
keep at least an extra month of expenses in your business so do everything you
can to make your business cash flow positive revenue will solve most
problems but just in case see if you can have a back-up plan for emergency
financing if you can demonstrate that your business has traction and revenue
is growing people may be willing to invest in your business topping up your
bank account could be the relief you need to get your business to being
cashflow positive you
there are lots of things you can do to help your business succeed and a lot of
them are simple everyday actions that make your business easier to run so here
we go open a business bank account right away
do not use your personal account for business expenses
it’s a horrible habit and makes tracking expenses very complicated it may also
put you in hot water with the tax authorities later get a debit card for
your business account and use it only for business expenses get accounting
software you can use inexpensive online tools to start but at some point you
probably need to move to something more robust but start to keep track of
expenses right away if you fall behind it is very difficult to catch up keep
receipts and write on the back of each what it was for have receipts for every
expense it’ll help tremendously if you ever get
audited once you put the expense into your accounting program file the expense
away in folders separated by expense type don’t fall too far behind on these
or else you’ll be swimming in paper use your accounting program to make a budget
as you go through the year look back at your budget and see how close your
actual numbers are to it review your finances at the end of every
month and make sure you know how much cash you have in the bank and what your
cash flow is also complete the year by reviewing your budget against your
actual full-year profit and loss and income statements and then do it all
again for the next year figure out your key performance indicators and track
them keep it to four or five main indicators these should be the most
important variables that will show how your company is doing make them
wide-ranging so for example you measure things from income customer growth costs
website traffic and maybe inventory terms try to have one person responsible
for each indicator and have them report on them each month with not only the
numbers but strategies for improving the numbers as well be best friends with
your banker they are your frontline defense against
financial problems a good banker will call you if something goes wrong like a
check is about to bounce or a suspicious transaction comes across her desk
she will also be the one to offer you a line of credit which is a terrific thing
to have at your disposal if you ever need it if you have a good relationship
with your banker she can help smooth out financial issues that may come up have
two people sign off on big expenditures set up a procedure to require any
expense over for example $1,000 to be approved by two people fraud can come
from both inside and outside a company having two people sign off and large
expenses ensures that all expenditures are legitimate be careful with your
books don’t play games trying to claim as many
expenses as you can run through your company your books should be a true
reflection of your business and will tell you a lot about what’s going right
and what’s going wrong if you start to play games trying to reduce income in
order to avoid tax you’ll be destroying the only true way to gauge how your
business is operating besides if you ever want to learn your bank is going to
look at your earnings and if you’ve messed with your books in order to avoid
tax you could be ruining your chance of getting a loan as well so keep your
books clean the ultimate tip is that in the end as long as you’re careful
diligent and honest you should have an easier time managing the finances of
your company you unless you’re one of the very lucky
business people who can grow their business through revenue alone you’ll
probably have to consider bringing in extra cash into your business and you
can do this in two ways through debt or equity with den you borrow the money and
through equity you give an investor a share in the company
for an infusion of cash there are pros and cons of raising money via debt and
equity and in reality many businesses do both but let’s dig into the fundamentals
of each first on definition financing means that you’re getting outside money
into your business it can also be called fundraising or capitalization all the
words mean the same thing getting an infusion of cash into your business debt
can come in the form of loans lines of credit or if you’re a really big company
through bonds loans can come from small business specialist loans short-term
loans or securitized long-term loans interest rates will vary depending on
how risky your lender thinks you are loans can also come from non-traditional
sources payday lenders pawnshops and credit cards but please don’t do this
they can inject money into your business but in an extremely expensive and
high-risk way banks are a great place to look for small business loans but be
careful of new online small business lenders they offer easy access to
short-term loans for businesses but their pricing can be murky they often
charge a fee instead of an interest rate and if you actually calculate the annual
percentage trade you’ll find that the rates are often higher than those on
your credit card so check out these rates carefully the pros of getting a
loan is that they’re clear and predictable and the business owner is
able to retain control and ownership of their company the cons of the loan is
that they have to be repaid with interest and payments need to begin as
soon as the loan is received if the business has trouble ramping up revenue
to cover the loan the debt payments can crush the company so many businesses get
started with money from families friends and colleagues these can come in the
form of loans which is great just ensure that interest payments terms and default
clauses are clear to both sides so now equity if you’ve ever watched TV shows
where hopeful entrepreneurs pitched their business to industry luminaries
who offer $20,000 for 50% of the company that’s extreme fundraising through
equity for established business owners the structure of fundraising through
equity should be fairly straightforward establish a value for your business and
then sell a percentage of the business respect sum of money this sort of
investment needs to be very well documented for both sides the investor
is now an owner of the company and will want to say in how things are on so
these issues need to be carefully documented and agreed upon the pros of
equity are that the business owner doesn’t need to repay the money as she
would alone and the investor can come with more than just money they can come
with much needed skills as well as a vested interest in seeing you succeed
the cons are that your ownership has been reduced and with that potentially
some autonomy there’s great resources online to learn more about different
types of startup fundraising including venture debt and convertible notes just
be sure to choose your source of extra funds carefully you a truism for many businesses is that
things take twice as long and cost three times as much as you thought it would
when you first set out so it’s very possible that at some stage in your
business you’ll need to borrow money first things first if you need to borrow
money make sure it’s the business that borrows the money not you no matter if
it’s a bank or a friend you need to make sure that you’re personally insulated
from the debt if things go wrong you need to know that there’s a line between
you and the debts that the business owes also note that this strategy only helps
you if you’re incorporated owners of sole proprietorships and partnerships
are personally liable for their business debts so if your business is thinking of
borrowing a lot of money seriously consider incorporating and when you look
at loans make sure you know not only how much the loan will cost overall but also
how much you’ll have to pay out each month this depends on the interest rate
of the loan and the term of the loan get as low an interest rate as you can but
you can be flexible on the term the longer the term the less you pay each
month but the more the loan will cost you overall so try to get as short a
term as you can with payments that are manageable so what are your options
sometimes the best place to start is where money will cost you the least do
you have friends or family that can extend a no interest or low interest
loan to your business even if you don’t need the money now make a list of people
that might be able to help you in the future you never know when you’ll need
help also try to think ahead about the terms for these sorts of loans and
whatever you do make it official with documents that lists the principal
amount borrowed the interest rates repayment terms and penalties if
repayments are missed moving up the chain you can also go to a bank for
loans and lines of credit for loans you get your money upfront and usually have
to start paying it back right away and you’ll be paying interest on the whole
amount right from the start with lines of credit you get access to a sum of
money but only pay interest on what you use lines of credit are great for new
businesses because they can sit dormant costing you nothing when you don’t need
them and can be accessed the moment you need help just make sure you know the
interest rates these loans and lines of credit and
understand how much they’ll cost before you jump in and don’t forget your local
credit union many of these have more flexibility than
banks and it’s nonprofits that invest in local communities you may find them more
able to meet your needs if you’ve decided to borrow money through a bank
or a credit union see if you can get preferential rates by bringing all of
your other accounts including your personal accounts to them but what about
non-bank options the last few years have seen an explosion of non-traditional and
online lenders there are many options available for small businesses who maybe
don’t have a long credit history or stellar financials to report but
remember these will often come at a higher price than your traditional
credit union or bank there are simple cash flow lines that can cover cash
crunches with unsecured loans usually they’re smaller loan amounts these are
often available at a few days notice and repaid daily or weekly over shorter
terms but interest rates here can be very high term loans usually cover
larger amounts such as 22 $500,000 with two to five year terms these need to be
repaid in monthly installments and are usually secured which means that they
have collateral against them so they have lower interest rates than cash flow
loans look to companies like Lending Club cabbage or funding circle for more
information but again with the caveat that they can have higher interest rates
with high fees and penalties for any issues that may arise if you use
QuickBooks for your bookkeeping there’s an option called quickbooks financing
that’s based on your cash flow and they can look for loans on your behalf and
complete much of the paperwork for you expect more seamless solutions like this
in the years to come and make sure you avoid the super high interest rates that
come from payday lenders and cash advances on your credit card yes
these loans are super easy to access but they carry extremely high interest rates
and fees the long-term cost of these loans can be substantial and the debt
difficult to manage this debt is also usually attached to you personally so if
your business goes under even if you are incorporated you’ll still be personally
responsible for those debts regardless of where you’re gonna borrow
it’s important to be prepared to share the details of how your business is
going and how you expect it to do post borrowing make sure your books are in
order as you’ll be expected to share profit and loss statements balance
sheets and all cash flow statements do yourself a favor and gather this
information before you need the money you so you’ve gone and borrowed money for
your business after all the hoops of paperwork and approvals you have to jump
through you may think that the hard work is done the money’s in the bank right
think again paying back money is much harder sorry
as humans we tend to overestimate positive outcomes and underestimate the
negative ones and once your business owes money it’s important to be
realistic about how you’re going to service that debt step one is to set up
a direct deposit for the time when repayments fold you you can always
change it manually but it’s important to have the repayments factored into your
monthly expenses also having a separate line item on your cash flow statement
helps you see instantly how your debt repayments fit into the big picture of
your company’s financials step two is to keep close track of your interest rates
a late repayment may send the cost of your debts skyrocketing make sure that
you’re keeping an eye on your repayment schedule and that you’re paying down the
principal as fast as you can make it a practice to track the principal and
interest in each payment monitor how actively you’re paying down the core
debt versus just servicing it through interest payments step 3
always be on the lookout for a better deal for example if you have multiple
short-term loans with moderate interest it may be worthwhile to consolidate all
of the loans into a single longer-term loan with the lower interest rate or if
you’re having trouble making payments see if you can renegotiate the terms of
the debt to extend the term this will likely raise the interest rate but will
make payments more manageable but what if you’ve already racked up debt maybe a
little too much often this happens for reasons out of your control maybe one of
your clients is paying you late or a competitor is taking a big piece of your
forecast revenue maybe this debt is on a business credit card that isn’t being
paid in full each month or it’s a line of credit that you’ve tapped into or is
from creditors that aren’t being paid on time or not at all it’s easy to feel
overwhelmed when this is the case here are a few strategies to get you back on
track first list out the outstanding debts and their associated interest
rates or penalties this is a little more locater than personal finance as you may
have creditors that are critical to keeping your business running that
aren’t necessarily charging you more interest but they could impact your
ability to stay in business so you basically have two jobs to figure out
which debts are costing you the most in interest and penalties and which that’s
a business critical to support next do the math on what you can afford to pay
down on a monthly basis it’s important to be ruthless here if you have expenses
that are non-critical now’s a good time to pause or cancel them and put the
savings into debt reduction start with allocating the minimum payments across
the bulk of the debts and then put remaining amounts against the highest
interest debt or most critical bills this is known as the debt stacking
method paying your way through your debts in accordance with what they cost
you there’s a great calculator at financial mentor calm to help you
organize yourself an alternative method is the debt snowball method which isn’t
as mathematically sound but has been proven to have psychological benefits
the goal with the snowball method is to start with minimum payments across all
debts and then tackle your smallest balance first by aiming to cross off
debt sooner rather than later motivation and momentum is built to tackle harder
debt and don’t forget to keep an open line of communication with your
creditors their businesses – and if you can’t make a payment see if they can
extend the payment terms or agree to a partial payment in the short term the
bottom line is that servicing debts can be one of the greatest stressors for
business owners but remember one thing big businesses generally groove through
strategic use of debt it’s one of the biggest benefits of this capitalist
world borrowing money to build your dream if you can service your debt in a
healthy way it will contribute to the growth of your business and you’ll be
using debt as it’s meant to be used as leverage instead of a burden you
in personal finance there’s a rule of thumb that says you should have three to
six months of living expenses in the bank as a contingency fund but does that
rule stand for small businesses too well the short answer is not running a
business can be more complicated than running a household with a regular
income patterns unexpected expenses and the need to invest for future growth in
every business the quiddity is important and to be liquid you need to have enough
cash on hand to write out these bumps you should also have positive cash flow
where the amount of money going into your business is greater than the money
going out to ensure that you don’t need to sell assets or borrow money in case
of a cash crunch it’s important to have a reserve of money set aside to smooth
the bumps to determine how much cash she should keep as a reserve follow these
steps first know how much cash you’re spending
at the current stage of your business a business that is in start-up mode spends
more on setting up and scaling than a business in maintenance mode this
monthly burn rate the monthly amount you’re spending on staff from equipment
supplies and marketing is something that you need to be very aware of next
forecast where your future cash is going to come from and when it’s gonna come in
if you have a long sales and payment cycles it’s especially important to have
a clear view on when cash will learn in your account it’s important to be
conservative both we’re spending and with forecast income it’s better to
under spend and be over paid than vice-versa this can be done through
software like QuickBooks or an Excel spreadsheet or even a trusty pen and
paper the important thing is that you look into the future to gauge what
you’re likely expenses and income will be so now to figure out how much for
cash reserve you need if your income and expenses are regular and predictable say
you run a gym with the loyal base of members you can afford to keep a smaller
amount of money in the bank say three months of expenses if you’re in a
business with longer sales and payment cycles like professional services or
software make sure you have at least six months or more but most businesses are
complicated so take a snapshot of expenses over six to twelve months
look at the average cash flow over that time as your base and then compare that
to your highest expense month if your highest expense month is ignant Li
higher than the average add more to your reserve and remember if you have an
opportunity to get extra cash into your business whether it’s through an
investment or a line of credit take advantage of it before the need arises
most businesses that fail do so for the simple reason that they don’t have the
income to pay their expenses but can having too much money in the bank also
be a problem we only have to look to Silicon Valley to answer that question
sometimes even the best funded startups crash and burn
why well when you have a lot of money on hand the human response is to spend it
more people bigger officers more money in marketing when you’re not counting
every dollar in its contribution to future growth it’s easy to fall into the
trap that growth equals success so what happens six months down the road when
the monthly burn is sky-high and the income isn’t coming in that’s right they
run out of money so yes keeping to higher reserve can be a
problem making you overspend but a high reserve can also stifle your business
managers can hold back a company’s ability to grow by protecting its cash
reserve too tightly so in many ways having a high reserve can be a problem
in the end income solves most cash problems when the money rolls in
problems tend to solve themselves keeping a clear view on what it really
takes to bring income in is the best strategy of all but making sure you have
enough cash to write out the bumps is super important too you so you made a profit this year that’s
terrific now the big question is what to do with
that profit it’s a great problem to have but one that does require some thinking
there’s two basic things you can do with the money you can either keep it in the
company and use it for growing your business or you can take it out and keep
it for yourself if you run a non-profit you only have one choice to keep it in
the company if you’re thinking of taking money out of your business you have to
decide how you’re gonna take the money out there are essentially two ways to
take money out of your business the first is through your salary and the
other is through draws disbursements and dividends in sole proprietorships and
partnerships there’s no difference between salaries and disbursements the
business is essentially an extension of the owners so both disbursements and
salaries are considered personal income and are treated by the tax authorities
as such just make sure you set up a drawer account to keep track of the
money you take out of the business so your taxes are easier to complete if you
have a corporation LLC or plc there’s a difference between taking money as a
salary and as a disbursement and the difference is about tax if you take
money out as income it’s taxed at your personal income tax rate when the money
is taken out as a disbursement usually a dividend that income is often taxed at a
different rate in the u.s. the rate on dividends is lower than that on income
so there’s a preference to take income as a dividend but be careful here some
tax authorities want you to be paid reasonable compensation for your work
the IRS in particular doesn’t want you to be underpaid therefore avoiding
payroll taxes that you should be paying at the same time when you’re starting a
business you want to keep as much money in the company as possible so often new
business owners take only a small salary so make sure you’d make a reasonable
salary so you don’t run afoul of tax authorities but once you’re making a
profit you now have a choice about what to do and it usually involves tax every
jurisdiction has different tax rules and often taxes on salaries is different
than that on capital gains which is what a disbursement is so now the question is
should you take money out of your business usually that isn’t solely a
business you have a life after all and some of
these decisions are based on your personal situation rather than where the
business is if you have a big bill to pay in your own life sometimes that
dictates what you do with the extra money in your business but if you decide
to keep money in the business what do you do with it well there’s lots of
things you can do you can hire new people move into a new market buy new
equipment give out bonuses move into a bigger office develop a new product but
no matter what you decide the decision should be an organic one it should flow
out of the discussion of where you are as a company and where you want to go
next do you want to be doing the same thing
but in a bigger market or do you want to do new things in the same market do you
want a reward employees for sticking with you through some hard times or do
you want to retain critical employees the answer to these questions will
dictate what you do next but the most important thing is to have a plan don’t
just spend the money make a plan and a budget and then move forward so again
congratulate yourself on having made a profit then sit down with your key
managers and talk about where your journey should go next you so let’s say you have enough money in
your business accounts to cover your short and medium costs for the next six
months but what if you still have a lot of money left over what a great problem
to have but just keeping money at the bank comes with a few risks first the
money isn’t growing and interest rates have been so low for so long and they
don’t seemed likely to rise anytime soon you work hard to earn that money so it
makes sense to put it to work for you second the temptation to overspend or at
least not be frugal is higher when you have a large financial cushion
overspending on things that don’t directly grow your business can be both
distracting and terrible for your long term burn rate so how can you put that
money to work here’s four ways the simplest is to move some of the money
into a certificate of deposit or CD first make sure you won’t be needing
that cash in the near term future with the CD you need to lock the money away
and not touch it but for that sacrifice you get a much higher rate of interest
the terms can range from weeks to years and generally increase with longer terms
another way to put your money to work is to open a business investment account
just like with personal investments you can put your company’s money to work in
stocks bonds and funds unlike a term deposit these assets are liquid meaning
that if you did need to access some money you can cash out quickly but also
know that unlike bank accounts investment accounts are risky your
investments can lose value so be aware of the risks you’re taking on with
interest-bearing accounts or investment accounts remember you need to include
your gains in your business tax returns accountants know this but if you file
your own taxes keep that in mind another thing you can do with your money is to
spend it on your employees hiring more people can help streamline some
functions if you’re going to bring in more people look carefully at the value
they’ll bring are they sales or marketing people that can be directly
tied to incremental revenue great they’ve research or development people
that’ll be creating value in the future also great when you look at hyper
successful companies like Amazon they have ruthlessly plowed every extra
dollar back into expanding their and growing their top-line revenue a
good lesson to learn the fourth way to put your money to work
is usually the first thing that people think of expansion opening a new
location or buying new machinery can seem like the shortcut to business
growth but remember growing too fast has its issues too
make sure you’ve really nailed your core business and are extracting as much
possible value from the assets you already have before expanding so
remember should you find yourself in the enviable position of having extra cash
at the bank put it to work but make sure you consider all the
options first you

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